Business Crimes Hotline

As a result of his guilty pleas, Maloy faces a maximum prison sentence of 10 years and a fine of $500,000. Maloy has agreed to pay restitution to the victims of his scheme.

Man Arrested for Illegally Exporting to China

Qing Chang Jiang (also known as Frank Jiang) was arrested on charges that he illegally exported 'dual-use' technology to the People's Republic of China in violation of 50 U.S.C. ' 1705(b). Affidavits filed by a law enforcement agent of the U.S. Department of Commerce's Office of Export Enforcement allege that Jiang unlawfully exported microwave amplifiers to a company in China. According to the affidavits, the address of the company was the same as an entity of the Chinese government known as 'The 54th Research Institute.' Microwave amplifiers are classified as 'dual-use,' meaning they have both commercial and military applications.

The maximum statutory penalty for violation of 50 U.S.C. '1705(b) is 10 years in prison and a fine of $250,000.00.

MARYLAND

Corporate Officers Indicted for Falsifying Financial Records

A federal grand jury in Baltimore indicted four former officers of Network Technology Group, Inc., a technology company, for defrauding a local bank and two investment companies by falsifying the company's financial statements. The ten-count indictment charges Michele Tobin (former CEO), Victor Giordani, Jr. (former COO), Thomas Bray (former CFO), and Beverly Baker (former Controller) with mail fraud, wire fraud, and bank fraud.

The indictment charges the former officers with defrauding Mercantile-Safe Deposit and Trust, the Smith Whiley Company of Connecticut, and the Abell Foundation (a Baltimore nonprofit corporation) by falsifying the company's books. The indictment alleges that the officers intentionally neglected to record all of the company expenses in order to give the appearance that the company was more profitable than it actually was. In addition, the indictment alleges that the company's accounts receivables also were falsified by diverting payments and failing to reduce the receivables, and by creating fictitious receivables. According to the indictment, the false financial information skewed the company's financial statement by more than $2 million and was used to solicit investments of $1.75 million in Network Technology Group, Inc. by Smith Whiley and the Abell Foundation in the spring of 2002. The false financial information was also allegedly used to deceive Mercantile, which provided a line of credit to the company that was secured by the company's receivables.

The maximum penalty for each count of the indictment is 30 years' imprisonment, a $1 million fine, and restitution.

PENNSYLVANIA

Three Indicted in Alleged Scheme to Defraud Companies

Norman Shapiro, Howard Coff, and Marc Feldman were indicted in Philadelphia for mail fraud and conspiracy to commit money laundering in furtherance of an alleged scheme to defraud numerous companies throughout the United States. According to the indictment, the defendants, who were the owners of Factory Supply Incorporated, Institutional Supplies, Standard Maintenance Products, and All-U-Want Electric Supply Company, fraudulently billed companies throughout the U.S. in the amount of approximately $5.8 million for items such as light bulbs, and industrial maintenance and cleaning supplies. The indictment further charges that Shapiro, Coff, and Feldman were the owners of a telemarketing company that fraudulently sold light bulbs and maintenance supplies to various businesses, companies, charities, and school districts. The aim of the scheme was allegedly to bribe an insider in a company or business, typically a maintenance worker or purchasing agent, to order extravagantly priced merchandise that would be paid by the employer or business.

PUERTO RICO

Bank Enters Deferred Prosecution Agreement

Banco Popular de Puerto Rico will forfeit $21.6 million to the United States as part of a deferred prosecution agreement on charges of failing to report suspicious financial activity. A criminal information report filed on January 16, 2003 in the United States District Court for the District of Puerto Rico charges Banco Popular with one count of failing to file Suspicious Activity Reports ('SARs') in violation of 31 U.S.C. ” 5318(g)(1) & 5322(a). Banco Popular waived indictment, agreed to the filing of the information, and accepted and acknowledged responsibility for its behavior in a factual statement accompanying the information. The company will forfeit $21.6 million to the U.S. government to settle any and all civil claims held by the government.

In light of the bank's remedial actions to date and its willingness to acknowledge responsibility for its actions, the prosecution has stated publicly that it will recommend to the court that any prosecution of the bank on the criminal charge be deferred for 12 months and eventually dismissed with prejudice if the bank fully complies with its obligations.

Under the Bank Secrecy Act, banks are required to have comprehensive anti-money laundering programs that enable them to identify and report suspicious financial transactions to the U.S. Treasury Department's Financial Crimes Enforcement Network ('FinCEN'). As part of their anti-money laundering programs, banks must report suspicious activities through the filing of SARs. Since April 1, 1996, banks have been required to submit SARs to FinCEN in all instances in which one or more transactions aggregate $5,000 or more, and the bank knows or suspects the transaction involves, or is conducted to conceal, funds derived from illegal activities or may be used to evade a law or a reporting requirement.

TEXAS

Indictment in $15 Million Securities Fraud Scheme

Harris Dempsey 'Butch' Ballow of Galveston, TX, was indicted in Houston on 12 counts of wire fraud, mail fraud, and money laundering. Ballow allegedly orchestrated a scheme to fraudulently induce brokerage firms to extend money, credit, and property totaling in excess of $15 million over a 6-year period to corporations owned by himself. According to the criminal complaint, Ballow allegedly engaged in a scheme to defraud various brokerage firms by opening margin accounts in the names of corporations he had incorporated or purchased, falsely representing that each corporation and its officers had a net worth in excess of $1 million, and significant income and investment experience. Ballow's corporations allegedly listed as officers his secretary, the maintenance man on Ballow's boat, and a handy man, among others. Ballow is accused of opening the accounts for the purpose of acquiring stocks and funds on margin.

The Business Crimes Hotline was compiled by Bradley J. Bondi, Esq., an associate with Williams & Connolly LLP, Washington, DC.

The maximum statutory penalty for violation of 50 U.S.C. '1705(b) is 10 years in prison and a fine of $250,000.00.A federal grand jury in Baltimore indicted four former officers of Network Technology Group, Inc., a technology company, for defrauding a local bank and two investment companies by falsifying the company's financial statements. The ten-count indictment charges Michele Tobin (former CEO), Victor Giordani, Jr. (former COO), Thomas Bray (former CFO), and Beverly Baker (former Controller) with mail fraud, wire fraud, and bank fraud.

The indictment charges the former officers with defrauding Mercantile-Safe Deposit and Trust, the Smith Whiley Company of Connecticut, and the Abell Foundation (a Baltimore nonprofit corporation) by falsifying the company's books. The indictment alleges that the officers intentionally neglected to record all of the company expenses in order to give the appearance that the company was more profitable than it actually was. In addition, the indictment alleges that the company's accounts receivables also were falsified by diverting payments and failing to reduce the receivables, and by creating fictitious receivables. According to the indictment, the false financial information skewed the company's financial statement by more than $2 million and was used to solicit investments of $1.75 million in Network Technology Group, Inc. by Smith Whiley and the Abell Foundation in the spring of 2002. The false financial information was also allegedly used to deceive Mercantile, which provided a line of credit to the company that was secured by the company's receivables.

The maximum penalty for each count of the indictment is 30 years' imprisonment, a $1 million fine, and restitution.Norman Shapiro, Howard Coff, and Marc Feldman were indicted in Philadelphia for mail fraud and conspiracy to commit money laundering in furtherance of an alleged scheme to defraud numerous companies throughout the United States. According to the indictment, the defendants, who were the owners of Factory Supply Incorporated, Institutional Supplies, Standard Maintenance Products, and All-U-Want Electric Supply Company, fraudulently billed companies throughout the U.S. in the amount of approximately $5.8 million for items such as light bulbs, and industrial maintenance and cleaning supplies. The indictment further charges that Shapiro, Coff, and Feldman were the owners of a telemarketing company that fraudulently sold light bulbs and maintenance supplies to various businesses, companies, charities, and school districts. The aim of the scheme was allegedly to bribe an insider in a company or business, typically a maintenance worker or purchasing agent, to order extravagantly priced merchandise that would be paid by the employer or business.Banco Popular de Puerto Rico will forfeit $21.6 million to the United States as part of a deferred prosecution agreement on charges of failing to report suspicious financial activity. A criminal information report filed on January 16, 2003 in the United States District Court for the District of Puerto Rico charges Banco Popular with one count of failing to file Suspicious Activity Reports ('SARs') in violation of 31 U.S.C. ” 5318(g)(1) & 5322(a). Banco Popular waived indictment, agreed to the filing of the information, and accepted and acknowledged responsibility for its behavior in a factual statement accompanying the information. The company will forfeit $21.6 million to the U.S. government to settle any and all civil claims held by the government.

In light of the bank's remedial actions to date and its willingness to acknowledge responsibility for its actions, the prosecution has stated publicly that it will recommend to the court that any prosecution of the bank on the criminal charge be deferred for 12 months and eventually dismissed with prejudice if the bank fully complies with its obligations.

Under the Bank Secrecy Act, banks are required to have comprehensive anti-money laundering programs that enable them to identify and report suspicious financial transactions to the U.S. Treasury Department's Financial Crimes Enforcement Network ('FinCEN'). As part of their anti-money laundering programs, banks must report suspicious activities through the filing of SARs. Since April 1, 1996, banks have been required to submit SARs to FinCEN in all instances in which one or more transactions aggregate $5,000 or more, and the bank knows or suspects the transaction involves, or is conducted to conceal, funds derived from illegal activities or may be used to evade a law or a reporting requirement.Harris Dempsey 'Butch' Ballow of Galveston, TX, was indicted in Houston on 12 counts of wire fraud, mail fraud, and money laundering. Ballow allegedly orchestrated a scheme to fraudulently induce brokerage firms to extend money, credit, and property totaling in excess of $15 million over a 6-year period to corporations that he owned. According to the criminal complaint, Ballow allegedly engaged in a scheme to defraud various brokerage firms by opening margin accounts in the names of corporations he had incorporated or purchased, falsely representing that each corporation and its officers had a net worth in excess of $1 million, and significant income and investment experience. Ballow's corporations allegedly listed as officers his secretary, the maintenance man on Ballow's boat, and a handy man, among others. Ballow is accused of opening the accounts for the purpose of acquiring stocks and funds on margin.

The Business Crimes Hotline and In the Courts were compiled by Bradley J. Bondi, Esq., an associate with Williams & Connolly LLP, Washington, DC.

CALIFORNIA

Man Pleads Guilty in $4 Million Oil and Gas Ponzi Scheme

Patrick Wayne Maloy, a former Orange County, CA, resident who allegedly defrauded investors out of $4 million in a series of bogus oil and gas investments, pleaded guilty in the United States District Court in Los Angeles to one count of mail fraud and one count of tax evasion. Maloy allegedly solicited victims to invest in companies that were purportedly involved in the exploration, development, and production of oil- and gas-producing properties. Maloy, who raised more than $4 million from over 100 investors throughout the United States, allegedly told investors that their funds would be used to acquire interests in oil and gas wells when, in fact, little money was used to acquire interest at all. Instead, Maloy allegedly diverted investor funds for his personal benefit. He also allegedly misused investor funds to operate a Ponzi scheme, in which he used money from new investors to pay old investors.

As a result of his guilty pleas, Maloy faces a maximum prison sentence of 10 years and a fine of $500,000. Maloy has agreed to pay restitution to the victims of his scheme.

Man Arrested for Illegally Exporting to China

Qing Chang Jiang (also known as Frank Jiang) was arrested on charges that he illegally exported 'dual-use' technology to the People's Republic of China in violation of 50 U.S.C. ' 1705(b). Affidavits filed by a law enforcement agent of the U.S. Department of Commerce's Office of Export Enforcement allege that Jiang unlawfully exported microwave amplifiers to a company in China. According to the affidavits, the address of the company was the same as an entity of the Chinese government known as 'The 54th Research Institute.' Microwave amplifiers are classified as 'dual-use,' meaning they have both commercial and military applications.

The maximum statutory penalty for violation of 50 U.S.C. '1705(b) is 10 years in prison and a fine of $250,000.00.

MARYLAND

Corporate Officers Indicted for Falsifying Financial Records

A federal grand jury in Baltimore indicted four former officers of Network Technology Group, Inc., a technology company, for defrauding a local bank and two investment companies by falsifying the company's financial statements. The ten-count indictment charges Michele Tobin (former CEO), Victor Giordani, Jr. (former COO), Thomas Bray (former CFO), and Beverly Baker (former Controller) with mail fraud, wire fraud, and bank fraud.

The indictment charges the former officers with defrauding Mercantile-Safe Deposit and Trust, the Smith Whiley Company of Connecticut, and the Abell Foundation (a Baltimore nonprofit corporation) by falsifying the company's books. The indictment alleges that the officers intentionally neglected to record all of the company expenses in order to give the appearance that the company was more profitable than it actually was. In addition, the indictment alleges that the company's accounts receivables also were falsified by diverting payments and failing to reduce the receivables, and by creating fictitious receivables. According to the indictment, the false financial information skewed the company's financial statement by more than $2 million and was used to solicit investments of $1.75 million in Network Technology Group, Inc. by Smith Whiley and the Abell Foundation in the spring of 2002. The false financial information was also allegedly used to deceive Mercantile, which provided a line of credit to the company that was secured by the company's receivables.

The maximum penalty for each count of the indictment is 30 years' imprisonment, a $1 million fine, and restitution.

PENNSYLVANIA

Three Indicted in Alleged Scheme to Defraud Companies

Norman Shapiro, Howard Coff, and Marc Feldman were indicted in Philadelphia for mail fraud and conspiracy to commit money laundering in furtherance of an alleged scheme to defraud numerous companies throughout the United States. According to the indictment, the defendants, who were the owners of Factory Supply Incorporated, Institutional Supplies, Standard Maintenance Products, and All-U-Want Electric Supply Company, fraudulently billed companies throughout the U.S. in the amount of approximately $5.8 million for items such as light bulbs, and industrial maintenance and cleaning supplies. The indictment further charges that Shapiro, Coff, and Feldman were the owners of a telemarketing company that fraudulently sold light bulbs and maintenance supplies to various businesses, companies, charities, and school districts. The aim of the scheme was allegedly to bribe an insider in a company or business, typically a maintenance worker or purchasing agent, to order extravagantly priced merchandise that would be paid by the employer or business.

PUERTO RICO

Bank Enters Deferred Prosecution Agreement

Banco Popular de Puerto Rico will forfeit $21.6 million to the United States as part of a deferred prosecution agreement on charges of failing to report suspicious financial activity. A criminal information report filed on January 16, 2003 in the United States District Court for the District of Puerto Rico charges Banco Popular with one count of failing to file Suspicious Activity Reports ('SARs') in violation of 31 U.S.C. ” 5318(g)(1) & 5322(a). Banco Popular waived indictment, agreed to the filing of the information, and accepted and acknowledged responsibility for its behavior in a factual statement accompanying the information. The company will forfeit $21.6 million to the U.S. government to settle any and all civil claims held by the government.

In light of the bank's remedial actions to date and its willingness to acknowledge responsibility for its actions, the prosecution has stated publicly that it will recommend to the court that any prosecution of the bank on the criminal charge be deferred for 12 months and eventually dismissed with prejudice if the bank fully complies with its obligations.

Under the Bank Secrecy Act, banks are required to have comprehensive anti-money laundering programs that enable them to identify and report suspicious financial transactions to the U.S. Treasury Department's Financial Crimes Enforcement Network ('FinCEN'). As part of their anti-money laundering programs, banks must report suspicious activities through the filing of SARs. Since April 1, 1996, banks have been required to submit SARs to FinCEN in all instances in which one or more transactions aggregate $5,000 or more, and the bank knows or suspects the transaction involves, or is conducted to conceal, funds derived from illegal activities or may be used to evade a law or a reporting requirement.

TEXAS

Indictment in $15 Million Securities Fraud Scheme

Harris Dempsey 'Butch' Ballow of Galveston, TX, was indicted in Houston on 12 counts of wire fraud, mail fraud, and money laundering. Ballow allegedly orchestrated a scheme to fraudulently induce brokerage firms to extend money, credit, and property totaling in excess of $15 million over a 6-year period to corporations owned by himself. According to the criminal complaint, Ballow allegedly engaged in a scheme to defraud various brokerage firms by opening margin accounts in the names of corporations he had incorporated or purchased, falsely representing that each corporation and its officers had a net worth in excess of $1 million, and significant income and investment experience. Ballow's corporations allegedly listed as officers his secretary, the maintenance man on Ballow's boat, and a handy man, among others. Ballow is accused of opening the accounts for the purpose of acquiring stocks and funds on margin.

The Business Crimes Hotline was compiled by Bradley J. Bondi, Esq., an associate with Williams & Connolly LLP, Washington, DC.

The maximum statutory penalty for violation of 50 U.S.C. '1705(b) is 10 years in prison and a fine of $250,000.00.A federal grand jury in Baltimore indicted four former officers of Network Technology Group, Inc., a technology company, for defrauding a local bank and two investment companies by falsifying the company's financial statements. The ten-count indictment charges Michele Tobin (former CEO), Victor Giordani, Jr. (former COO), Thomas Bray (former CFO), and Beverly Baker (former Controller) with mail fraud, wire fraud, and bank fraud.

The indictment charges the former officers with defrauding Mercantile-Safe Deposit and Trust, the Smith Whiley Company of Connecticut, and the Abell Foundation (a Baltimore nonprofit corporation) by falsifying the company's books. The indictment alleges that the officers intentionally neglected to record all of the company expenses in order to give the appearance that the company was more profitable than it actually was. In addition, the indictment alleges that the company's accounts receivables also were falsified by diverting payments and failing to reduce the receivables, and by creating fictitious receivables. According to the indictment, the false financial information skewed the company's financial statement by more than $2 million and was used to solicit investments of $1.75 million in Network Technology Group, Inc. by Smith Whiley and the Abell Foundation in the spring of 2002. The false financial information was also allegedly used to deceive Mercantile, which provided a line of credit to the company that was secured by the company's receivables.

The maximum penalty for each count of the indictment is 30 years' imprisonment, a $1 million fine, and restitution.Norman Shapiro, Howard Coff, and Marc Feldman were indicted in Philadelphia for mail fraud and conspiracy to commit money laundering in furtherance of an alleged scheme to defraud numerous companies throughout the United States. According to the indictment, the defendants, who were the owners of Factory Supply Incorporated, Institutional Supplies, Standard Maintenance Products, and All-U-Want Electric Supply Company, fraudulently billed companies throughout the U.S. in the amount of approximately $5.8 million for items such as light bulbs, and industrial maintenance and cleaning supplies. The indictment further charges that Shapiro, Coff, and Feldman were the owners of a telemarketing company that fraudulently sold light bulbs and maintenance supplies to various businesses, companies, charities, and school districts. The aim of the scheme was allegedly to bribe an insider in a company or business, typically a maintenance worker or purchasing agent, to order extravagantly priced merchandise that would be paid by the employer or business.Banco Popular de Puerto Rico will forfeit $21.6 million to the United States as part of a deferred prosecution agreement on charges of failing to report suspicious financial activity. A criminal information report filed on January 16, 2003 in the United States District Court for the District of Puerto Rico charges Banco Popular with one count of failing to file Suspicious Activity Reports ('SARs') in violation of 31 U.S.C. ” 5318(g)(1) & 5322(a). Banco Popular waived indictment, agreed to the filing of the information, and accepted and acknowledged responsibility for its behavior in a factual statement accompanying the information. The company will forfeit $21.6 million to the U.S. government to settle any and all civil claims held by the government.

In light of the bank's remedial actions to date and its willingness to acknowledge responsibility for its actions, the prosecution has stated publicly that it will recommend to the court that any prosecution of the bank on the criminal charge be deferred for 12 months and eventually dismissed with prejudice if the bank fully complies with its obligations.

Under the Bank Secrecy Act, banks are required to have comprehensive anti-money laundering programs that enable them to identify and report suspicious financial transactions to the U.S. Treasury Department's Financial Crimes Enforcement Network ('FinCEN'). As part of their anti-money laundering programs, banks must report suspicious activities through the filing of SARs. Since April 1, 1996, banks have been required to submit SARs to FinCEN in all instances in which one or more transactions aggregate $5,000 or more, and the bank knows or suspects the transaction involves, or is conducted to conceal, funds derived from illegal activities or may be used to evade a law or a reporting requirement.Harris Dempsey 'Butch' Ballow of Galveston, TX, was indicted in Houston on 12 counts of wire fraud, mail fraud, and money laundering. Ballow allegedly orchestrated a scheme to fraudulently induce brokerage firms to extend money, credit, and property totaling in excess of $15 million over a 6-year period to corporations that he owned. According to the criminal complaint, Ballow allegedly engaged in a scheme to defraud various brokerage firms by opening margin accounts in the names of corporations he had incorporated or purchased, falsely representing that each corporation and its officers had a net worth in excess of $1 million, and significant income and investment experience. Ballow's corporations allegedly listed as officers his secretary, the maintenance man on Ballow's boat, and a handy man, among others. Ballow is accused of opening the accounts for the purpose of acquiring stocks and funds on margin.

The Business Crimes Hotline and In the Courts were compiled by Bradley J. Bondi, Esq., an associate with Williams & Connolly LLP, Washington, DC.